Tuesday, October 11, 2005


I happened to be listening to the radio on my way to Ft. Belvoir this evening and overheard a commercial sponsored by Chevron. It encouraged listeners to conserve fuel by driving 55 mph instead of 65, and asked them to "do their part" in conservation.

What makes me conserve fuel? It certainly isn't radio commercials. The high prices I pay to fill up my car are encouragement enough to conserve. I don't take long drives without a compelling reason. I've even started carpooling to work on some occasions. None of these actions were brought about by environmentalists, politicians, and Chevron encouraging me to conserve. All were brought about by my utility maximization. If before I had to give up only 3/4 of an hour of my time to fill up my car with gasoline and now I have to give up a full hour of my time to pay for a tank of gas, I am not going to use as much. I'm not going to frequent the restaurants that are thirty miles away; instead, I'll go to the restaurants that are within five miles.

Prices are driven by scarcity, and human action is driven by prices. We all seek to spend as little as possible to attain our desired end. When prices rise, we find other ways of accomplishing those ends -- ways that cost less. We can thank the market for motivating our 'conservation efforts.'

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